This will allow Apple to take advantage of its iOS lock-in and increase device sales.

The report seems to be informed speculation more than hard fact.
But, it makes a lot of sense for Apple to attack the video market
as a way to differentiate itself from rivals.

Here's the big highlights of his report:

Apple's North Carolina data center is going live soon, if it
hasn't already. In addition to the one data center, Apple appears
to be planning to build a second one right next to the original.

Apple could be building a few other data centers elsewhere in
the U.S. and then in Europe. Misek writes, "We can envision Apple
creating the service first in the United States and then rolling
it out internationally."

These "super data centers" are going to be used to deliver
video to Apple devices. The reason Misek believes these data
centers are for video? They're too big to be for music, which is
much smaller files.

Further supporting his overall video hypothesis, Misek says,
"We find it notable that the content companies, citing a lack of
domain license, asked Cablevision to remove channels from its
iPad app. We believe these same companies are
negotiating some sort of deal with Apple."

Here's Misek's thoughts on how it could work: "In terms of
content we think some sort of subscription model also makes sense
... We believe Apple has learned much from having Netflix on the
Apple TV and we cannot help but feel
Apple will try to improve on this model somehow. So how does
Apple convince Hollywood and other content creators to license
it? In our view, the best way to do that would be the model they
use for App developers: let them take the vast majority of the
revenue while you use the content to drive device sales and
monetize it that way. We are huge fans of iTunes, but that cannot be it from Apple. There
is another level coming here and we see this as one of the most
fruitful potential uses of Apple’s enormous cash hoard."

Misek also speculates Jobs could be stepping down soon, and
wants to revolutionize video as a final act.

The big advantage of building an inclusive video service for
Apple: It can drive sales of iPads, iPhones, and other Apple
gadgets. If it works, it's an Apple-specific software service
that Google can't offer with Android.

This is rough news for wireless networks and cable providers.
It would be more bandwidth consumption for both. For cable
providers it would be another "cord-cutting" style threat.

Jefferies believes Apple will launch either a new set top box
or an actual television in 2012 or 2013. While the TV business is
usually pretty crappy from a margins perspective, Misek argues
Apple's years of supply chain management, software and hardware
design could be a big advantage.